This exercise is designed to test your knowledge and skills in shopping for auto insurance and demonstrate how insurers price and underwrite this coverage. Obtain quotes from Geico and Progressive.

Underwriting Information:

Name:____________________________________ Age: 24 Year/Make/Model: 2020 Chevy Equinox

Coverage:

Liability Limits: 50,000/100,000/25,000 Medical Payments: $10,000 Uninsured/Underinsured Motorists: 50,000/100,000 Comprehensive Deductible: $500 Collision Deductible: $250 Decline any other coverage

1. What were the amount of the quotes you received from the insurance companies (you must obtain quotes from at least two insurance companies' website)? If the quotes you received differ, why might they vary (be specific)?

2. After you have received quotes based on the above coverage choices, change your comprehensive deductibles to $1000, collision deductible to $500, and obtain revised quotes. (1) How do the quotes change and why? (2) What are the costs and benefits of having low deductibles versus high deductibles?

3. Starting with the second quotes you received (i.e. with the $1000 comprehensive deductible and $500 collision deductibles), change your liability limits to 100,000/300,000/50,000 and your Uninsured/Underinsured limits to 100,000/300,000. (1) How do the quotes change and why? (2) What are the costs and benefits of the increase in policy limits? (3) How does the premium change of lower deductibles compare with the premium change of increased limits? Which one, deductible or coverage amount, is more expensive? (4) What does this imply about optimizing your expenditures on auto liability insurance (given a budget)?